Fantastical Myths and Grim Reality

Worthy Causes

LONDON – Whew! The Dow shot up on Wednesday morning and fell in the afternoon. Not a good sign [ed. note: indeed, it wasn’t]. We have to be careful not to say anything controversial today. Otherwise, we won’t be able to keep up with the mail. (Catch up on our controversial essays about the Oregon situation here and here.)

Avoid!

What other people think matters. People get upset – even homicidal – over ideas and myths, not reality. Catholic, Protestant, Shiite, Sunni, Democrat, Republican, land rights in the West… captured U.S. soldiers… racial slurs… the master race…

Manifest Destiny… terrorism… global warming – there is no idea so bogus it can’t be the cause of a government program or a massacre. Thoughts – like viruses – enter the brains of humans and take control of them.

Then, acting as though they know what they are doing, people try to “improve” the world around them. They tax, kill, argue, torture, demonstrate, seize public land, write letters to the editor, and call up Rush Limbaugh. Ditto to that!

The cause is always a worthy one, of course. And there are always people to blame… people standing in the way of a better world. They must be forced to wear seat belts and sign up for health insurance – for their own good.

The Johnny Rebs must be kept in the Union. Incomes should be more “equitable.” Trade should be fair. Hey, what about the Declaration of Independence? And don’t forget to free the Holy Land!

What you think is what you get… no matter how absurd. And then, reality imposes itself, and you get something else altogether, often the exact opposite of what you wanted.

Reality doesn’t care what you think. Thoughts hardly matter. Reality happens whether you want it or not. Nobody threatens his weatherman when the temperature falls; everyone knows it’s not his fault. The sun shines. We grow old and die. Three aces beat two pair.

An extra-careful look at uncaring reality …

So, what are markets? Myth? Or reality? Answer: They are both. In the short run, they are myth spinners. If everyone believes the economy is healthy and prices will rise, they probably will rise… at least for a while. But in the long run, reality sets in. No matter how many people expect – and want – prices to continue to go up, at some point, they will go down.

No amount of wishful thinking can erase debt, create profits, or stop markets from going up and down. There is always some truth that overrides delusions, myths, and group-think.

Poverty, Misery, and Quasi-Slavery

Think back to the all the 20th century experiments with socialism and central planning; Russia, China, and Venezuela come to mind readily. Did they lead to the workers’ paradise that the proles were promised?

Did they create the rational, productive, and fair economies that people expected? Nope! They led to poverty, misery, and quasi-slavery for millions of people. Even the most fantastical myths have real consequences.

An uplifting image from the world’s last remaining Stalinist paradise.

Pity the poor virgin; she dismissed a myth as “superstition.” Then, they tossed her in the volcano anyway. Then when the grumbling volcano grew silent: “Look, it worked,” they said, giving each other high fives until the hot ash fell on their heads and the burning lava covered their feet.

One of the most surprising and disturbing myths today is the myth of “terrorism.”

This is not to say that there aren’t real flesh-and-blood terrorists. But they are hardly a serious threat to the U.S. or to its people. And “going after terrorists” doesn’t necessarily make you safer… as the invasion of Iraq proved in spades.

But the power of the myth is so strong that every Republican presidential candidate believes it will take him to the White House. The politicos ride the myth; then the myth rides them.

From Dream to Nightmare

Take Hitler’s myth that Germany had to build up its army to wipe out enemies on all sides and gain “living space.” At first, it seemed to make sense. Then the myth began a trend. And the trend took on a life of its own. Soon, there was no stopping the Nazis’ “security industry” – led by Hitler himself. His Thousand-Year Reich stormed over Europe for six years.

Then it met its own horrific apocalypse. The dream had brought its own nightmare. Germany was bombed, defeated, destroyed. The supposedly invincible Wehrmacht had provoked the Red Army; once roused, the Reds were unstoppable.

What the 1,000-year Reich looked like after six years (Nuremberg, Egidienplatz) …

Reality was grim. Roughly 1 out of every 10 Germans – more than 7 million of them – died in the war. The invading Soviet soldiers raped thousands of German women… and countless others committed suicide to avoid this fate. And Germany’s Jewish population was almost totally wiped out.

Investing in a myth can bring the same perverse results. Investors piled into stocks after 2009 because they believed a potent myth: The Fed had “saved the day.” Bernanke was a hero. We were on the road to recovery.